All responses here assume that you are asking about a 529 account. If you are not asking about a 529 account, you need to clearly state what type of account you are asking about.
Unless the beneficiary has control of the account, how is the beneficiary going to do this without the approval and active involvement of the account owner/custodian?
The IRS could assess income tax and a 10% penalty on the earnings portion of any distribution that is not used for qualified expenses in the same year that the distribution is taken. Note that paying the taxes and the penalty would be the responsibility of the student, if the distribution was made payable to the student.
See directly above.
Is the "account holder" the account owner? If so, the money in the account belongs to that person, and generally the account owner can do whatever he/she wants with the money.
If a 529 distribution is made payable to the beneficiary or the school, the 1099-Q will be issued to the beneficiary, under the beneficiary's SSN, and the beneficiary will be responsible for any tax-related consequences of how the funds were used.